Key Highlights
- Galaxy Digital introduced an over-the-counter prediction markets trading desk targeting institutional clients, marking a significant expansion by a major digital asset firm.
- The inaugural transaction involved a $10 million event swap with Arca, a crypto-focused hedge fund, centered on the passage of the CLARITY Act before 2027.
- Operated through Galaxy’s Global Markets division, the desk provides access to markets on both Kalshi and Polymarket platforms.
- Prediction market platforms processed more than $60 billion in trading volume throughout 2026, though significant orders can still create price impact on public exchanges.
- Galaxy’s internal analysis estimates a 75% probability for CLARITY Act passage, exceeding the 50% to 73% range currently reflected in Kalshi and Polymarket pricing.
Galaxy Digital has entered the institutional prediction markets arena by unveiling an over-the-counter trading desk designed to enable hedge funds and family offices to establish positions on political and economic outcomes at volumes that traditional public platforms struggle to accommodate.
Operational Framework of the Trading Desk
The new trading desk operates under Galaxy’s Global Markets division, concentrating on non-sports event contracts available on Kalshi and Polymarket.
Galaxy functions as a principal counterparty in these transactions, providing direct price quotes while assuming risk on its balance sheet. This structure enables the firm to execute substantial trades without creating disruption in public order books.
Institutional clients can additionally combine prediction market exposures with offsetting positions in equity and commodity markets. This capability provides sophisticated investors with tools to construct comprehensive, event-driven investment strategies centered on political developments and regulatory decisions.
According to the firm, prediction markets generated over $60 billion in trading volume during 2026. However, liquidity constraints persist for larger transactions. An institutional-sized $10 million order placed directly on current platforms could trigger significant price movements before execution completes.
Inaugural Transaction: CLARITY Act Event Swap
The desk’s first trade involved a $10 million event swap executed with Arca, a cryptocurrency-focused hedge fund.
The transaction references the Digital Asset Market Clarity Act, proposed legislation that would establish a comprehensive regulatory structure for digital assets across the United States. The swap structure requires Arca to compensate Galaxy if the legislation is enacted into law before 2027, while Galaxy compensates Arca if the bill fails to pass.
Jeff Dorman, chief investment officer at Arca, characterized prediction markets as among the most effective instruments currently available for hedging against regulatory uncertainty emanating from Washington. He noted that Arca’s institutional scale made direct platform participation challenging due to insufficient liquidity depth.
Galaxy’s research division currently projects a 75% likelihood of CLARITY Act passage. The legislation cleared the Senate Banking Committee with a 15-9 vote on May 14. Galaxy’s analysts forecast a potential signing date during the week beginning August 3.
Market participants on Kalshi and Polymarket have valued the same outcome within a 50% to 73% probability range over the recent month.
Jason Urban, Galaxy’s global co-head of digital assets, emphasized that event-driven markets are emerging as critical instruments for sophisticated investors seeking to express macroeconomic perspectives, and that the new desk provides clients with a counterparty capable of executing block-sized transactions.
Rapid Expansion in Prediction Market Activity
Aggregate monthly trading volume across Kalshi and Polymarket platforms expanded from below $5 billion in September 2025 to approximately $24 billion by April 2026.
Kalshi recently disclosed that its annualized institutional volume surged 800% across a six-month period, reaching $178 billion. The platform secured $1 billion in financing at a $22 billion valuation last month.
Intercontinental Exchange, the corporate parent of the New York Stock Exchange, has committed $2 billion in capital to support Polymarket’s growth.
Additional trading firms have established presence in this sector. Jump Trading and Wintermute initiated formal operations earlier this year. Polymarket also recently facilitated its first block transaction, involving broker FalconX and trading technology provider Anera Labs.
Galaxy shares declined 6% on Tuesday, tracking broader weakness across cryptocurrency-related equities.
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